Prosper Company is a footwear company which operates two product divisions, shoes division and sandals division. Selected data on the two divisions are as follows: Divisions Shoes Sandals Sales $3.140.000 $1.975.000 Variable cost $1.570.000 $1.105.000 Fixed Cost $1.250.000 $750.000 Average Operating Asset $1.600.000 $700.000 Current Liabilities $300.000 $190.000 Required Rate of Return 15% 10% Required: 1. Calculate return on investment (ROI) for each division By breaking the computation into two separate elements margin and turnover. Use net operating income as a measure of income and average operating assets as a measure of investment. 2. Compute the residual income for each division of Prosper Company. 3. Assume that each division is presented with an investment opportunity that would yield a 15% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? 4. Prosper Company, whose tax rate is 25%, has weighted average cost of capital of 9%. All of the company's Assets are Operating Assets. Compute Economic Value Added (EVA) for each division